Once the state's premier casino lawyer, Lazaroff was on his way to becoming Missouri's best-known white collar criminal. He'd stolen from clients. He'd stolen from his law partners and recruited colleagues to launder political contributions. He'd just been forced to resign as a partner at Thompson Coburn, one of the state's most prestigious law firms. He was under investigation by the U.S. Attorney's Office and the Missouri Gaming Commission, which suspected he had tried using inside information from former commission chairman Robert Wolfson to help Station Casinos, one of his biggest clients.
Lazaroff had already made a sworn statement to investigators denying any wrongdoing by himself or Station. Now, he was in the Clayton office of his attorney, Art Margulis, for a meeting with Station lawyers Scott Nielson, Rich Haskins and David Helfrey. The casino's lawyers came together because they wanted witnesses -- Helfrey had warned them not to speak with Lazaroff alone. Helfrey did the talking, explaining the seriousness of Lazaroff's situation and what would happen to him. Federal prosecutors would likely be charging him with felonies, he'd lose his law license and he'd probably go to jail, Helfrey predicted. It was the first time anyone had explained to Lazaroff just how much further he could fall.
"We don't think that the commission has anything," Helfrey said during that meeting, last December. "We have your sworn testimony that you did not have ex parte conversations (with Wolfson). There will undoubtedly come a time where you'll be tempted to lie in order to save yourself because of all of these other problems that you have, but we know that you'll do the right thing. OK?"
You'll do the right thing, Helfrey repeated.
To Lazaroff, Helfrey's statement sounded like a death threat. He later recounted leaving the meeting and telling Nielson, "I don't want to meet with that guy ever again. He scares the hell out of me." Breaking down in tears, he asked Nielson to take care of his family if anything happened to him.
Fear wasn't a familiar emotion for Lazaroff. Born into privilege, he attended Horton Watkins High School in Ladue, graduated with honors from Brown University and earned a law degree at the University of Michigan. He had the highest batting average in the state when it came to getting gaming licenses for his clients. Just 11 of 36 applicants have gotten the go-ahead to build casinos in Missouri. Lazaroff represented five of those successful applicants -- he never represented a company that didn't succeed. He would do anything to win, even going so far as to undermine competing proposals.
As one of the most prominent attorneys in St. Louis, Lazaroff earned $500,000 a year and rubbed shoulders with the rich, famous and politically connected. He was a rainmaker for Thompson Coburn, bringing in clients worth millions to himself and his partners. He also raised big money for Democratic political candidates ranging from presidential hopefuls to local politicos like former St. Louis Mayor Vincent Schoemehl. He had enough juice to secure birthday greetings from U.S. Rep. Dick Gephardt and President Bill Clinton for friends of friends. He wined and dined at the Kennedy compound in Hyannisport and used the home of former U.S. Sen. Thomas Eagleton, a Thompson Coburn partner whose office was next to his own, for political fundraisers.
Lazaroff had spent his professional life helping others out of jams, but he couldn't see a way out of this one. He says he spent a day thinking about what Helfrey had told him. Then, expecting the St. Louis Post-Dispatch to run a story publicizing his forced resignation and his crimes, Lazaroff slipped out of his Town & Country home in the wee hours of Dec. 8 and went for a drive. At 4 a.m., he called the office of gaming commission director Col. Clarence E. "Mel" Fisher and left a voice-mail message:
" Hey, Mel. Michael Lazaroff. How are you? It's Wednesday morning and I just want to tell you something and I want you to listen to it very carefully. I am being as candid and as honest as I can possibly be under the circumstances. And I want you to hear this and hear this very clearly: At no time did Station Casinos ask me ever to get information from Robert L. Wolfson. At no time did I attempt through ex parte communication to get any information from Robert Wolfson. He and I talked an awful lot, but never did that occur. I did a lot of foolish things in my life, and I am going to pay the penalty for them, but I want them to be separated from all these other things, and I want that to be abundantly clear to you and to everybody else. And I pray that you'll not punish the innocent.... Do you hear me? Thank you. You are one of the finest men that I've ever known, and I hope that life is good for you, sir. Thank you."
Those were Michael Lazaroff's intended last words, delivered in an emotionless, measured tone, as if he were reading them. Without leaving a note for his loved ones, Lazaroff then swallowed a handful of Tylenol PM and prescription drugs. A security guard found him an hour later, passed out in his 1998 BMW 740i, which was parked in the grass in front of Woodlake Plaza Center, near the I-64/Highway 141 interchange. Police couldn't wake him. Even after several hours in the St. Luke's Hospital emergency department, he remained unconscious.
But Lazaroff survived. Ever the dealmaker, he was placing calls to Station executives and Wolfson from his bedside phone in the psychiatric unit of Barnes-Jewish Hospital a few days after the suicide attempt, trying to find a way out of his fix. Finally, just as Helfrey feared, Lazaroff reversed himself as prosecutors tightened the screws.
Now, Lazaroff, who has pleaded guilty to three felonies, says he did break gaming regulations by discussing pending Station business with Wolfson. Furthermore, he says, Station executives knew about the violations and sometimes listened in while he chatted with the chairman. And commission officials believe him. Thanks to letters they sent to U.S. District Court Judge Charles Shaw, Lazaroff escaped with little more than a "tsk-tsk" for crimes that would otherwise have earned him a minimum of 27 months in federal prison. He got 30 nights in jail and 90 days' house arrest.
While Lazaroff does time at his $710,000 home in Town & Country, the scandal he triggered is reshaping the state's casino industry. A year ago, Station Casinos, with $288.5 million in gross receipts for the fiscal year ending June 30, was the second-largest casino company in Missouri and seeking to get even bigger by acquiring the Hilton Flamingo casino in Kansas City. Now, the company is trying to leave the state. A deal to sell its casinos to Ameristar, which earlier this year lost its bid to build a casino in Lemay, was announced Oct. 18 and is awaiting approval by the gaming commission.
Station is retreating under pressure from the commission, which is threatening to revoke its gaming licenses. Commission investigators say the company paid Lazaroff $500,000 in bonuses that were hidden from the commission and intended to influence him to influence Wolfson. The investigation has spilled over from Station to other Lazaroff clients, including the President Casino in St. Louis. Lead investigator Eric Wilhoit told Judge Shaw that Lazaroff gave the commission "essential information concerning the investigation into violations of the code of state regulations and Missouri criminal statutes by individuals and corporations licensed to conduct gaming in the state of Missouri."
The public record, however, casts doubt on Lazaroff's truthfulness while also raising questions about whether gaming commission officials slept while he and Wolfson skirted rules intended to keep the commission honest in appearance as well as in fact. Commission officials had known since 1993 that Lazaroff and Wolfson were talking outside commission meetings and that the discussions continued despite warnings to both men. Yet the commission's staff, which is now treating those discussions as serious violations, didn't do anything beyond telling the two men to stop their illicit talks. Commissioners with voting power weren't told about the secret talks when they occurred, which begs the questions: How many violations of gaming regulations has the commission's staff kept to itself, and what might the commission have done had it known that its chairman and Lazaroff were breaking the rules? In addition, the commission four years ago discovered a $100,000 bonus payment from Station to Lazaroff but took no action.
The commission acknowledges that the investigation has exposed warts. "If you're going to be frank and open with the public, you've got to take the bad with the sweet," says Fisher, the commission's executive director and former head of the Missouri Highway Patrol.
Kevin Mullally, the commission's legal-affairs director, who considered Wolfson a friend, says he was stunned when he learned about the chairman's frequent talks with Lazaroff. "I was fairly close to him," Mullally says. "I never got the indication that he was having these conversations with people. The first time I heard Lazaroff's testimony, I almost wanted to go out back and throw up."
When Gov. Mel Carnahan appointed the Missouri Gaming Commission in 1993, Lazaroff didn't immediately recognize the names phoned in by a Thompson Coburn associate. "Then she said, "a Clayton businessman, Robert Wilson,'" he recalls. "And I didn't know a Robert Wilson. And all of a sudden it dawned on me who that might be. And I said, "Are you sure that it's Wilson and not Wolfson?' She said, "That's right, that's right -- Wolfson.' So I did know him."
Owner of Brentwood Volvo, Bob Wolfson had several business interests, including a sports-trading-card company, restaurants and real-estate investments. He helped found the St. Louis Blues and served as vice president and treasurer for the hockey team before it was sold to Ralston Purina in 1977. Lazaroff had known Wolfson for most of his life and considered him a friend. He'd gone to high school with Wolfson's kids. From 1990-95, the two men served together on the board of directors at Westwood Country Club, where Wolfson helped get memberships for some of Lazaroff's law partners.
Wolfson's role as regulator and Lazaroff's job as casino advocate didn't hinder their friendship. During a chance meeting in the country-club locker room, Wolfson asked Lazaroff to place a Kentucky Derby bet for him the next time he was in Las Vegas. Wolfson attended a bar mitzvah for Lazaroff's son in 1997, and Lazaroff attended similar ceremonies for the chairman's grandchildren. Their friendship was common knowledge, and Lazaroff, who was known for name-dropping, made no attempt to hide it.
Missouri Riverboat Gaming Association president John Michael Ryan, who spoke with Lazaroff hundreds of times by telephone, says it wasn't unusual for the attorney to cut short a conversation because Wolfson was on the other line. "Michael Lazaroff made no secret that he was a friend of Robert Wolfson's before his appointment and that he had continuing contacts with Robert Wolfson after his appointment to this commission," Ryan says. "The way that those contacts would be communicated would be at meetings of the association members, where Lazaroff would tell all of the members that he had talked to Wolfson about this or that issue. There was no question he was bragging and wanting everyone to know that he had conversations with Wolfson all the time." However, the information Lazaroff passed on to the association was hardly earth-shattering. Usually he'd get advance notice of the date and location of the next commission meeting.
Those who know him say Wolfson is a hands-on fanatic when it comes to information and details. He certainly exhibited those tendencies during his six years on the commission, according to past and present commission officials, who say they were shocked to learn the chairman had spoken to Lazaroff hundreds of times. "Based on the number of phone calls I was getting, I didn't think he had time to call anybody else," says former executive director Thomas Irwin.
The Missouri Gaming Commission held its first meeting in May 1993, in a West Port Plaza office provided by Chairman Wolfson. Would-be casino operators paid the commission $1.75 million in application fees on the first day of business. There was tremendous pressure to get casinos open so the state could cash in on the nation's highest gambling tax. Several casino companies, including Station, had already purchased riverboats, acquired sites and negotiated development agreements with local governments. Companies that could open facilities the quickest stood the best chance of getting licenses from the commission. The stakes measured in the millions of dollars.
But the commission started out with no staff, no ethics code and no protocols spelling out how gaming licenses would be processed. For six months, Wolfson was the commission's de facto executive director. When casinos had questions or proposals, they went straight to him.
It was a situation ripe for influence-peddling. At the very least, it looked bad. Shortly after he was hired, Irwin says, he told Wolfson to keep his distance from casino executives and their representatives. "We had several discussions about that, about what the executive director needed to do and what the chairman of the commission needed to do," Irwin says. He thought he had made himself clear to Wolfson, but it wasn't a simple task. "His frustration, I think, was that he had never been involved in government, and he just didn't understand why all these processes were in place," he says.
Wolfson -- unlike other commissioners who were satisfied with monthly reports -- called the staff daily. He was particularly interested in whether riverboats were making money. "If he wanted something faxed, he wanted it faxed right then, not 20 minutes from now or 10 minutes," Irwin says. "And I can remember one specific occasion ... that he had asked for something to be faxed. I said, "I'll take care of it.' I had asked my secretary to do this. She apparently had taken too long to walk from my office to the fax machine. He called again. It was, like, four minutes had elapsed. And he said, "Well, where is it?'"
The staff welcomed Wolfson's interest and help in evaluating applications, especially casino-financing plans. Irwin calls Wolfson "an exceptionally bright human being" and "a brilliant business person"; legal-affairs director Mullally praises Wolfson as "one of the smartest men I've known." The commission didn't have anyone on staff with as much expertise as Wolfson, so he would occasionally sit in on meetings when applicants presented financing plans.
But Wolfson wasn't supposed to talk with casino representatives about applications unless a staff member was present. Thirteen months after their first meeting, commissioners, at the behest of the staff, put the rule in writing by passing an ethics code banning direct talks between casinos and individual commissioners about license applications and other matters pending before the commission. Mullally recalls telling Irwin that conversations between Lazaroff and Wolfson were the reason the commission needed such a rule.
Irwin suspected Lazaroff and Wolfson of continuing their private talks after the written ban went into effect in June 1994. "And it wasn't just, you know, it wasn't just Lazaroff," Irwin says. "I thought (Wolfson) might be talking to some of the others."
Irwin confronted both men after something Wolfson said -- he can't recall just what -- convinced him the two were flouting the ethics code. Lazaroff recalls that Irwin pulled him into an office at the commission and "very sternly and very thoroughly admonished me for what he thought were my conversations with Chairman Wolfson and told me in no uncertain terms that they must stop." Irwin gave Wolfson a similar warning. Lazaroff neither admitted nor denied anything. Wolfson denied anything improper. "He told me (conversations) were not taking place and that if it happened, he would cut it off, and, you know, I took him at his word," Irwin says.
But the conversations didn't stop. And gaming officials knew it.
In 1996, the gaming commission held a public hearing to determine whether Hilton should be granted a gaming license for the Flamingo Hilton Casino in Kansas City. The brand-new casino remained closed amid state and federal investigations into allegations that Hilton executives had funneled $250,000 to a company associated with a Kansas City Port Authority commissioner in exchange for a lease on the casino site. The gaming commission wasn't about to grant a license to a company tainted by executives who'd engaged in questionable business practices.
One week after the hearing, Hilton CEO Stephen Bollenbach appeared at a commission meeting and assured regulators that everything was on the up-and-up. Three top executives linked to the financing and bribery scandals had just resigned, Bollenbach announced. The company had erred in the past, he acknowledged, but things had changed. "This company and a few of our employees made mistakes," he told commissioners. "As CEO, I want to assure you they will not happen again."
Commissioners wanted to know the circumstances surrounding the unexpected resignations: Why had the executives resigned? Had they been forced out? Wolfson, who'd been speculating about whether Hilton would give up executives to secure a license, seemed particularly curious. He wanted to know whether the executives, particularly company president Raymond "Skip" Avansino, got special severance deals. No, Bollenbach explained. The executives left voluntarily for various reasons, and none would get anything beyond what was required in standard severance packages or existing contractual arrangements. "So there's certainly nothing that's being done special for them in relation to this," he assured the commission.
Bollenbach's mea culpas worked. "I'd just like to express my pleasure for your recognition of the problems and making every effort to straighten them out," Wolfson told him. The commission went into executive session, then came out and approved the license.
Wolfson, who voted in favor of licensing, wasn't so complimentary behind the scenes. Under the terms of a golden parachute crafted the day before the commission meeting, Avansino had agreed to resign only after Hilton promised to pay him $3 million. Lazaroff had negotiated Avansino's agreement, then given the chairman a copy.
"After the meeting I was in my office and (Wolfson) called me, and he said, "Bollenbach lied,'" Mullally later recalled. "And I said, "What do you mean, Bollenbach lied?' He said, "Well, Bollenbach lied about Avansino, that there wasn't anything special done for him in order to obtain his resignation.' ... I asked him, you know, "How do you know?' He said, "Well, I just know.' He said, "I've got a source.' And I said, "Well, who is the source?' And he said, "Well, that's -- it's irrelevant.'"
The conversation meandered on to other subjects, as it often did when Mullally and Wolfson spoke -- the two spent as much time talking about family and football as they did about casinos. But as soon as they hung up, Mullally walked down the hall and told Fisher, who was then deputy director, that Wolfson had a source who said he could prove that Bollenbach had lied to the commission. Fisher and Mullally called Irwin and relayed the information, much to the dismay of Wolfson, who called Mullally a few minutes later about an unrelated subject. "I said, "By the way, you know, I told Tom about what you said about Bollenbach,' and there was just silence," Mullally says. "And he said, "Well, that was just between you and me.' And I said, "Well, I didn't realize that.' ... And he said, "Well, just don't do that again.'"
With Fisher, Mullally and other staff members listening in, Irwin confronted Wolfson. "I called Mr. Wolfson on the speaker phone and, you know, insisted: "Where is this from? Where did you get it?'" Irwin says. "And he just refused to tell me." Mullally has a similar recollection. "Tom questioned him about it," Mullally recalled. "He said, "I need to know where you got that information.' And he declined. And I think Tom pressed him a little more, and he said something like "Look, I've been going to Las Vegas for years before it was, you know, built up like it is now, and I have a lot of friends there and I can make a couple of phone calls and find out all kinds of things' -- something to that general effect." Mullally says Irwin "got very animated and angry about it." He wasn't alone. "We were highly incensed that the chairman would not divulge where he got the information," Fisher says. "There was a lot of frustration among the staff that that had occurred."
But Irwin dismissed the matter after the chairman refused to reveal his source or details about Avansino's severance deal. The director told Wolfson the commission's staff would rely on information gathered by Highway Patrol investigators, who didn't have a copy of the agreement. "I said, "Well, whatever you're insisting, we don't have, so I'm assuming it's not true,'" Irwin says. Investigators soon learned about the severance package and confirmed that Wolfson had been telling the truth. They also discovered the chairman's source.
"A few days later, a week later, one of the investigators said, "You'll never guess who's representing Avansino: Lazaroff.'" Irwin says. "At that point, although we couldn't get anybody to admit it or prove it, it became pretty certain in our minds that that letter may have come from Mike Lazaroff."
Although many of the allegations against Station remain in dispute and rely on circumstantial evidence, the Avansino affair was a concrete example of inappropriate talks between Lazaroff and Wolfson. The chairman, who confessed during an August public hearing before the commission, had a history of suspected ex parte violations. He hid information about Bollenbach's testimony from fellow commissioners, who could have rejected Hilton's license application or otherwise sanctioned the company on the grounds the CEO had misled them. The staff, once it found out who was representing Avansino, was convinced Wolfson's source was Lazaroff, not some imaginary Vegas contact. But the staff didn't pursue the matter until four years after it happened. By then, it was too late to punish Hilton, which has long since left Missouri.
When asked about Bollenbach's testimony and whether he had lied, Marc Grossman, a Hilton vice president, says, "I'm just not going to resurrect stuff that may or may not have happened four years ago." Grossman, who attended the 1996 meeting and heard Bollenbach's remarks, adds: "The fact of the matter is, dealing with the gaming authorities in Missouri was at best surreal and at worst a hellish experience. We are perfectly satisfied to be out of the Missouri gaming business."
Why didn't the commission try harder and sooner to force Wolfson to identify his source? "Realistically, there wasn't a hell of a lot we could do," Fisher says. "I guess we could have made it a public issue, but I'm not sure that would have gotten us very far."
Meanwhile, concerns about Lazaroff's conduct grew among industry insiders. Ryan, the gaming-association president, was appalled when Lazaroff told him he was representing Avansino, who at the time was still a license applicant, and bragged about the severance package he'd negotiated. Lazaroff even told Ryan he would bring the golden parachute to Wolfson's attention. "I nagged him a lot about his apparent conflicts of interest," Ryan says. "And on this occasion, I really recall because it was so blatant.
Lazaroff's downfall began a year ago, when Station announced plans to purchase the Flamingo. Facing license revocation over the Port Authority bribery scandal, Hilton agreed to sell to Station for the bargain-basement price of $22.5 million -- Hilton had invested $115 million in the project. The deal was contingent on the approval of the gaming commission.
But Joseph Canfora, a former Station executive who had a lawsuit pending against the company for wrongful termination, also wanted the Flamingo. Canfora and his group of investors launched a public campaign to stop Station's bid. There was also plenty of action behind the scenes.
Canfora says he once walked into the Las Vegas office of Station president Frank Fertitta III and heard him tell Lazaroff by speaker phone to check something -- he can't remember just what -- with Wolfson. Canfora, whose lawsuit was settled out of court earlier this year, also knew the company had paid Lazaroff $500,000 in bonuses that hadn't been reported to the commission. Having signed one of the checks himself, Canfora mentioned the bonuses in a deposition taken in his lawsuit. Commission investigators learned about the deposition when they interviewed Canfora a year ago in the course of determining whether Station should get a license for the Flamingo.
Lazaroff says he and Station expected that Canfora would try to block the purchase by alerting gaming agents to the bonuses. They weren't particularly worried. Station had paid Lazaroff in four installments, each of which was reported to the IRS by him and the company. Station also included the payments in financial records that were available to the gaming commission. Indeed, William Fox, a commission auditor, stumbled across a $100,000 payment in late 1996 while checking Station's books for something else. Gaming agents visited Lazaroff then and asked about the money. He told them it was a bonus paid as a reward for telling Station that they'd have a better chance of getting a gaming license if they built a hotel along with their Kansas City casino, which opened in 1997.
Lazaroff's explanation struck Fox as odd. It was common knowledge that companies that proposed hotels stood the best chance of getting gaming licenses -- the commission's staff had told applicants and newspaper reporters about the preference. But gaming agents didn't pursue the matter with Station, Lazaroff or his employer. They simply trusted Lazaroff (who still insists Station's hotel plans were based on a tip from Wolfson) to tell the truth. They didn't look further to find the other bonuses on the company's books.
"I really didn't think anything of it after Mr. Lazaroff told us it was a bonus, that his company (Thompson Coburn) knew about," Fox later testified, adding that he would have checked with Thompson Coburn had he been aware of the other $400,000 in bonuses. "It's completely my fault. I just didn't think it through, the $100,000." Fox wasn't the only one who wasn't thinking. "I think everybody knew about it," Fox says. "I didn't keep it quiet. Other people in the office knew about it."
The reason the bonus seemed innocuous was that it was innocuous. There is no requirement that gaming corporations notify regulators when they give bonuses -- an apparent loophole in the regulations exempts corporations, but not individuals or other entities holding licenses, from disclosing such payments on license applications. If casino companies are supposed to tell regulators about such bonuses, asks Station, why didn't the commission say so when Fox stumbled across the $100,000 payment to Lazaroff?
Station routinely gave five- and six-figure bonuses (and, on one occasion, seven Rolex watches worth $16,000 apiece) to attorneys, consultants, advertising firms and lobbyists for work in Missouri and other states without reporting them to the government. In an affidavit prepared for Station, Geoffrey Hazard, a Yale Law School professor who specializes in legal ethics, says there was nothing illegal or improper about Lazaroff's bonuses, considering that the stakes in a license bid run into the millions of dollars. "In particular, it is my view that the size of the bonuses were reasonable under the circumstances and that Station justifiably relied on Lazaroff's assurances that the bonuses had been cleared with his law firm," Hazard states. "Thus there is nothing about the bonus payments that should raise any inference that they were being made to secure inside influence with the Missouri Gaming Commission."
Station says it paid the bonuses because it wanted to reward Lazaroff when the company obtained gaming licenses or permission to keep its boats permanently moored so gamblers could board anytime. Station also paid Lazaroff to ensure that he gave the company top priority. Lazaroff represented several gaming interests, including five casino companies and the Missouri Riverboat Gaming Association. Clients competed for his attention. Some didn't get as much as they felt they deserved. The riverboat association, for example, dropped Lazaroff as its attorney in 1996. "Several of the members felt that he was not representing the interest of the industry as a whole, that he was tilting in his representations to Station Casinos," Ryan says. "And it was interesting that one of Station's representatives voted with the others to remove him on the theory that he would have more time to devote to Station."
Commission investigators who dissected Lazaroff's finances eventually satisfied themselves that none of the bonus money went for bribes. He'd spent it on home improvements and on maintaining the lavish lifestyle to which he'd become accustomed. But Lazaroff's talks with Wolfson were far more troubling and became the focus of the commission's investigation.
Using long-distance and cellular telephone records provided by Lazaroff, commission investigators found that he and Wolfson had spoken at least 200 times during the chairman's tenure on the commission. Lazaroff says he gleaned inside information from the chairman and made pitches for his clients, who often asked him to lobby the chairman or gather intelligence. He says Wolfson tipped him that the commission would approve plans for Station's Kansas City casino within a few days of the formal announcement.
In addition to phone conversations, Lazaroff faxed the chairman at least seven documents ranging from casino-financing plans to a newspaper article disparaging a Station rival. When the chairman underwent back surgery, Lazaroff sent catered dinners to his home. Who paid for the meals isn't clear -- Lazaroff's secretary says this is one of many cases in which her boss falsified bills so that clients who thought they were paying for legal expenses were really paying for concert tickets, dinners and other gifts designed to curry favor, often with clients.
Wolfson has denied having any improper conversations; nor can he recall receiving financing documents that bear his fax number. Although accepting gifts from casino representatives is forbidden, investigators in an August public hearing didn't ask Wolfson or Lazaroff about the free dinners in bed. In response to a written question from the Riverfront Times, Wolfson says he received between 50 and 100 gifts, including meals, plants and flowers, during his recovery from surgery. "I do not recall receiving the meal from Michael, but in any event, I certainly did not consider it a significant factor or one which was worthy of mentioning to the Gaming Commission or anyone else," he says. Wolfson, however, has acknowledged using Lazaroff to get tickets to Las Vegas shows for relatives and business associates. "It was bad judgment," he told the Kansas City Star after testifying before the commission in an August hearing.
The commission has shown no sign of going after Lazaroff, who says he'll continue cooperating with investigators. The commission can't do anything to Wolfson because there are no penalties for violating the commission's ethics code. The governor can remove a commissioner for malfeasance, but Wolfson, citing his health, left the gaming commission in February 1999.
That leaves Lazaroff's clients to face the music. So far, it's often proved a case of an admitted liar's word against what everyone else says.
Lazaroff says he called Wolfson one night four years ago to protest when gaming agents closed the President's poker room. He says he pushed the chairman to approve open boarding for the President and also got early word that the commission wouldn't approve a competing casino in South County for at least three years. And he says President executive vice president James Zweifel more than once asked him to go to Wolfson.
President executives deny the charges. "He never brought up the name Bob Wolfson regarding any subject, including open boarding," says Zweifel, who flatly denies asking Lazaroff to contact Wolfson about any gaming issue. Irwin says Wolfson never spoke to him about the poker-room incident. (Lazaroff says Wolfson spoke to Matt Brown, a Highway Patrol lieutenant who oversees St. Louis-area casinos, about the matter. Brown has not made any public statements).
Mullally says the President remains under investigation but adds that the case against the President isn't as strong as the one against Station, whose executives usually qualify their denials with "not to the best of my recollection."
In one instance, Station admits, executives knew that Lazaroff was speaking with Wolfson. General counsel Nielson and Lazaroff were driving from Jefferson City to Kansas City in the lawyer's car when Lazaroff called Wolfson. The lawyers agree on the topic of the 1997 conversation: They talked about a recent state Supreme Court ruling barring boats-in-moats, then chatted about their families. Nielson says he was initially uncomfortable but decided the conversation didn't violate the ex parte rule because they weren't talking about a Station matter pending before the commission. At the time, Lazaroff and the commission were on the same side. The commission was a defendant in the lawsuit brought by state Rep. Todd Akin (R-Town & Country), who convinced the Missouri Supreme Court that boats-in-moats were illegal. Lazaroff represented the riverboat gaming association, which had intervened and made arguments in the case. "I was calling Wolfson to bring him up to date as to what the industry was going to do about the Akin issue," Lazaroff says.
Steve Taylor, lobbyist for the anti-gambling group Casino Watch, says the conversation violated the ex parte rule because Station had an interest in the Supreme Court decision, which affected the future of its casino in Kansas City. Mullally acknowledges that Lazaroff's many clients makes it possible to defend such conversations on the grounds that the lawyer was talking about industry-wide issues, not a specific matter relating to a particular client. "It gets real mooshy," he says.
Station executives admit faxing a financing plan directly to Wolfson in 1995 but insist the commission's staff had granted permission for Station to send financing documents directly to the chairman. Lazaroff and Wolfson also say the staff granted approval for the fax.
A year later, Lazaroff sent another financing plan to Wolfson, four days before Station sent an identical document to the commission's staff. The idea was to get early word from the chairman about any concerns so the plan could be changed before it was submitted to the staff, Lazaroff says. But Lazaroff and Wolfson didn't speak to each other before Station sent the plan to Irwin, according to phone records and the lawyer's testimony. Station, which denies any scheme to get an early critique of its plan from Wolfson, says Lazaroff's tale (which has not been corroborated) makes no sense. If there was such a scheme, the company says, Station executives would have waited for an answer from Wolfson before sending the plan to Irwin.
Station has pointed out other holes in Lazaroff's story. For example, Lazaroff says he once spoke with Wolfson on the porch of Thompson Coburn's St. Charles offices about financing for Station's proposed Kansas City casino. Nielson was there and listened in as Lazaroff lobbied the chairman, Lazaroff maintains. After the call ended, Lazaroff says, Nielson told him, "I wish we had this kind of relationship and this kind of influence out in Nevada."
But Lazaroff's notes, written at the time of the phone call in a Daytimer, show the conversation occurred six weeks after the commission approved a license for the Kansas City casino. And Station, which owns several casinos in Las Vegas, does enjoy "this kind of relationship" with regulators in Nevada, which has no rules against conversations between casinos and gaming regulators outside official meetings. That's why the Nevada Gaming Control Board in September approved Station's purchase of the Santa Fe casino in Las Vegas -- even if the Lazaroff's allegations are true, his conversations with Wolfson wouldn't have broken any laws in Nevada, says board chairman Steven DuCharme. "While the ex parte communication rule is Missouri law, we don't have something similar," says DuCharme, who adds that Nevada regulators have reviewed Missouri Gaming Commission investigative files that haven't been made public. "We interact with licensees every day, all day."
Commission investigators acknowledge that much of their case against Station is based on circumstantial evidence, things like Lazaroff's habit of closing his office door when Wolfson returned calls and the fact that the lawyer's calls to Wolfson stopped when the chairman's term expired, then started again last fall when the investigation began. "It's like Col. Fisher says," Mullally explains. "There's thousands of people in the penitentiary who were put there by circumstantial evidence -- and on the testimony of a convicted felon."
If Lazaroff was attempting to use Wolfson to influence the commission, he didn't succeed, at least according to commission officials who are in charge of the investigation. Mullally, the chairman's closest friend on the staff, says Wolfson never talked to him about which companies should win the right to build casinos. "As far as talking about should it be, you know, Station or Harrah's or something like that, no," he says. "I don't ever remember him -- I know I talked to him a lot -- I don't ever remember anything like that." Asked whether Wolfson made pitches for Station or the President, Fisher answers "None whatsoever."
It's not clear just where the investigation is headed. During an Oct. 11 hearing, former Ralston Purina CEO R. Hal Dean, who is on the Station board of directors, was mentioned for the first time -- Mullally asked Station executives whether they knew that Dean and Wolfson were friends. Wolfson says investigators have never asked him about Dean. (Dean did not return calls from the Riverfront Times.) In another new line of questioning, Mullally also asked whether Station has been involved with Wolfson or a member of his family in projects in Colorado or Mexico. "We had a number of leads that came up after the (August) public hearing," Mullally says. "Once you get some of this stuff out there, you get people calling in, saying, "Guess what I know?'"
Station, whose executives refused to testify in public last August but ultimately did so on Oct. 11, after the commission threatened not to renew its licenses, has protested that there should have been no public inquiry until the investigation is complete. Station has also said it should have had a chance to cross-examine Lazaroff and other witnesses and obtain internal commission documents through a discovery process.
Station may get its day in court. The commission last week passed a pair of resolutions setting up a hearing at which Station can present a defense, including the chance to call witnesses and examine internal commission records. The resolutions, although stopping short of finding Station unsuitable for license renewal, accuse Station of paying Lazaroff to improperly influence Wolfson. The resolutions fault Station executives for not testifying in August and say Station should have reported ex parte conversations between Lazaroff and Wolfson. No hearing date has been set, and no hearing would be necessary if the commission approves Ameristar's bid to purchase Station's casinos before Station's licenses expire in a couple of months.
Wolfson, 82, says he's suffered "immense emotional stress." Like Station, he criticizes the commission for not allowing his attorney to cross-examine witnesses against him. "People should judge me by my past impeccable record in the business community and in my personal life, rather than by the ravings of a convicted felon trying to save himself from prison," he says.
Mullally says the commission isn't on a fishing expedition -- allegations were either corroborated or there was some reasonable evidence that there was something there to investigate. "This investigation went far beyond what we asked about in public," he says. "We didn't just willy-nilly question people in public where there was no corroborating evidence. At some point in time, it's in the public's interest to have these questions answered in a public forum."
But the end may be in sight. "I think we're winding down," Mullally says. "I think everybody would like for this to end." Station, which has been trying to get out of the state since July, two weeks ago announced it is selling its Missouri casinos to Ameristar contingent on the gaming commission granting licenses to Ameristar. Station has invested about $600 million in the properties, which will cost Ameristar $475 million in cash. A previous offer from Station executives to buy the Missouri holdings stood little chance of commission approval because several of those executives are targets in the Lazaroff investigation.
Michael Lazaroff says he has risked his life to help the gaming commission find the truth. In letters to Judge Shaw, gaming-commission officials give credence to his fear. "While fearful for his and his family's safety, he testified under oath for about four hours regarding issues developed during the investigation," Fisher wrote. Wilhoit, the commission's lead investigator, also praised Lazaroff. "Mr. Lazaroff provided this cooperation even though he was, and continues to be, concerned about the safety of himself and his family," Wilhoit told the judge. "Information learned during our investigation, while not independently verifying Mr. Lazaroff's concerns, do suggest that they may have validity."
Helfrey chuckles about his alleged role in threatening Lazaroff's life.
Helfrey would have been an odd choice to play the heavy. As head of the federal Organized Crime Strike Force in Kansas City, Helfrey in 1985 prosecuted several organized crime figures in the nation's biggest casino skimming case, which was immortalized in the movie Casino, starring Robert De Niro. Since entering private practice in 1986, Helfrey has counseled gaming officials in Louisiana and Michigan on how to write regulations to keep casinos honest and the mob at bay. When Missouri voters approved casino gambling in 1992, Helfrey was quick to blast the new law, authored in part by Lazaroff, as weak and dangerous. "What you have here is a recipe for trouble," Helfrey told the Post-Dispatch. "If you allow this industry to start out corrupt, it will take you 20 years to clean it up." State legislators subsequently overhauled the law to close loopholes identified by Helfrey and others with expertise in regulating casinos.
Asked whether Lazaroff's fear of Helfrey was sound, Fisher says, "You know, I don't want to get into that." Nor will he discuss the basis for Wilhoit's statement that the investigation's findings suggested Lazaroff's fear was valid. "I don't think I'm at liberty to say," he says.
Helfrey says he was merely prophesying last December and that his predictions proved true: Lazaroff changed his story after being charged with felonies and given the choice of cooperating with investigators or serving more than two years in prison. "There's no way in the world I'd threaten him," Helfrey says. "First, his lawyer's there. Art Margulis has been around for a while. He knows how to handle things like that. He'd have kicked my ass right out the door."
Helfrey's voice rises as he discusses Lazaroff's legal saga. "He's sentenced like he's a victim," he says. "How did Lazaroff become the victim? He steals money from his clients. He steals money from his partners. He lies to everybody. And all of a sudden he's the victim."
Station says it's the victim here, and, on one score at least, no one can dispute that. Lazaroff stole more than $110,000 from the company by inflating legal bills. He charged Station for bogus expenses such as photocopying that was never done and long-distance phone calls that were never made and used the money for meals, concert tickets and other gifts he showered on clients. He did the same thing to the President and several other clients, all of whom were reimbursed by Thompson Coburn after internal auditors discovered the billing irregularities. Station was the biggest fish. The phony legal bills were the basis of one of three felonies to which Lazaroff pleaded guilty last June.
Lazaroff has also pleaded guilty to causing false reports to be filed with the Federal Election Commission. Lazaroff convinced colleagues at Thompson Coburn to make $1,000 contributions to Al Gore and Bill Bradley, then reimbursed his fellow attorneys for those contributions, which amounted to a violation of federal election law limiting contributors to $1,000 per candidate. Thompson Coburn lawyers who participated in the scam haven't been charged [Bruce Rushton, "Truth and Consequences," RFT, July 12]. Lazaroff also pleaded guilty to fraud in accepting $500,000 in bonuses from Station without telling his partners, who were entitled to share the money. Under the firm's partnership agreement, Lazaroff was entitled to keep less than $10,000.
Judge Shaw ordered Lazaroff to repay more than $760,000 he stole from Thompson Coburn and his clients. Shaw levied no fine and tacked on just $300 in court costs. Lazaroff won't be spending much time in a cell. Citing letters he received from gaming-commission officials, Shaw sentenced Lazaroff to 30 nights in jail and 90 days' detention in his Town & Country mansion.
Lazaroff was full of remorse at his Oct. 3 sentencing, telling the judge he'd surrendered his morals to greed. "At times, I was a monster," he confessed. His attorney was less contrite immediately afterward during an impromptu press conference on the courthouse steps. Margulis pooh-poohed his client's crimes, calling the case "overblown" and fed by "media hype." But he didn't have a quick reply when a television reporter asked how the charges could be considered minor, considering how much money Lazaroff had stolen.
"I wish you wouldn't ask me that fucking question, because I don't have a good answer," he said.